Is Supply Chain Ready for the Next Generation of S&OP?

Adopt a business culture of planning and get on the fast track to S&OP success


With the Stanford Global Supply Chain Management Forum, which partners with a select group of industry leaders to advance global supply chain management, Johnson helped spread awareness regarding S&OP over the past three years in terms of best practices, its maturity spectrum and adoption rate, executive summaries from S&OP-focused events, in addition to S&OP’s current challenges. The forum helps facilitate collaboration between Stanford University and companies; as well as between industry thought leaders within those companies to help them connect with their peers and interact with other companies and industries.

“People are still learning about S&OP,” added Johnson. “Some people are very clear on what stage of S&OP they are at and some people are just trying to educate themselves with a lot of different viewpoints and stories. There are definitely people that know where they are and where they are going but there are quite a few people that don’t.”

As such, the industry must continue to fundamentally connect the sales and operations planning processes “but also make tradeoffs that expand the two sides in an integrated way,” he said.

“By the same token, businesses are fundamentally different when you get below that macro level,” continued Johnson. “You have the process industries and the assembly-driven industries and the service-driven industries. And there are very important differences to each and that’s where the apps side of things comes in really strong. There is a foundational level that is very shared and common and there are going to be a lot more tailored vertical- and industry-specific things that people are going to naturally want.”

Industry movements in S&OP

Pleasanton, Calif.-based Steelwedge Software Inc. is one such S&OP solutions and services provider that, in addition to its work with Stanford University in spreading educational awareness regarding the business planning process, continues to help businesses in the supply chain tackle their S&OP adoption challenges on a global scale.

Providing a number of architecture apps that address demand policy, inventory segmentation and stocking strategy, the Steelwedge Integrated Business Planning (IBP) platform assembles data from multiple systems in any format—including ERP, SCM, CRM, BI and finance—into a single, unified cloud-based platform. More specifically, one of the other applications Steelwedge provides is a range-based forecasting approach to address the need for range-based statistical forecasting viewing as opposed to from a single view.

“With almost all of our clients, there’s some level of inventory optimization that we support because you can’t look at tradeoffs in supply and demand without looking at both finished goods and intermediate work in progress,” explained Glen Margolis, Chief Executive Officer, Steelwedge Software Inc. “A lot of the things that we work on with Professor Blake Johnson at Stanford University is integration not just for clients but on a broader S&OP scale. For ex., if you know the variability of the time zones of suppliers as well as demand, how do you use that knowledge to more effectively assess tradeoffs as you develop an S&OP plan? When you are looking at tradeoffs, you have to ask yourself ‘Do I want to make some investments here? Do we take a hedge here because we want to protect ourselves from any unwanted surprises? What do we do in terms of investing in inventory?’”

Addressing the global scale

In extending S&OP beyond the four walls comes the factor of businesses expanding operations to global regions. And what S&OP processes work for one company may drastically differ for companies in another region dealing with other economic factors, government regulations and business ideologies.

For ex., while the U.S.-based retail company which we referenced earlier in this story initiated S&OP into its business after developing its planning culture, not every country yet embraced such solid disciplines around planning.

In the United Kingdom, planning is not necessarily seen as an integral hands-on approach to ones business, confirmed the senior leader of S&OP for this U.S.-based retailer. In that environment, each buyer instead keeps their own plans off to the side—with nothing utilized or disciplined about this strategy.

Suffice to say that S&OP technology, let alone the planning culture, is not viewed today as the cost of doing business but instead, just an optional area, according to Nari Viswanathan, Vice President, Product Marketing and Management, Steelwedge Software Inc.

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